Recently SEBI imposed regulatory measures on SME IPOs, however, that couldn’t hold back the segment and this is evident with the BSE SME IPO index which surged significantly surpassing all other benchmarks both domestically and globally, and even other asset classes such as gold, crude, and silver.
BSE SME IPO Index Domination
In 2024, not even the most popular cryptocurrency gained more than the sme ipos. While the Bloomberg Bitcoin Index increased by 121%, the BSE SME IPO index gained over 135%.
The US indices such as NASDAQ gained 31% during the year, while Dow Jones gained 14% and S&P gained 25%, all way below the gains poured in for the BSE SME IPO index.
Similarly, in the European region, FTSE 100 saw a 7% gain during the year, while Germany’s DAX witnessed a 13% return, France’s CAC 40 even declined by 8% during the year.
Asian indices performances were mixed. While Hang Seng increased by 18.6%, the CSI 300 increased by 13% during the same period, and Japan’s Nikkei gained 7.5%.
If anything was close enough from the stock market to the massive gains registered by the SME IPO index that has to be Srilanka’s index going up by 62% and Pakistan’s index going up by 80%. However, these are lesser-tracked markets and thus do not play a much role in pulling global investments.
The S&P BSE Sensex and Nifty 50 gained around 6% each in the year 2024 until now, which is a modest performance in a market that has been volatile due to different external pressures, as well as dragged by poor earnings in the second quarter.
The BSE Midcap index gained around 23% while the BSE smallcap index gained 26% during the year, which can be said to have showcased great performance compared to the overall market performance.
The yellow metal, gold gained around 27% during 2024, while silver rose 19%, again way less than the growth of the BSE SME IPO index. The crude oil gained only around 4% during the calendar year while platinum gained around 10%.
What made SME IPOs rally this year?
The rally in the SME IPO space has been exceptional this year and analysts think that the strong participation by retail investors has been the main reason behind this surge. The SME IPOs were even oversubscribed this year and that too by 100 times and more. All these are the reasons or outcomes of exceptional liquidity in the market and retail investors’ fear of missing out on potential listing gains.
Even the recent tightening of the regulations for SME IPOs could not control the craze amongst investors for these IPOs. Instead, the retail investors are more confident now with enhanced transparency in the SME IPO segment. SEBI came up with rigid eligibility criteria for SME IPOs, and this indicates a better place for SME IPOs to thrive. This also will make sure that only the top SMEs can get into the public market and raise capital, which in turn helps build the investors’ confidence.
Strong demand by the investors even set aside the restrained rate cut expectations, and other geopolitical issues couldn’t drag the SME IPOs down.
SME IPO Future Prospects
In 2025, SME IPOs are projected to witness similar demand and the interest of retail investors to grow further. More SMEs and other businesses now understand the benefit of public funding. However, maintaining quality is the key to long-term development in this space. Prioritizing sustainable growth and prudent usage of funds is necessary for offering long-term growth to investors.
Source: MoneyControl
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